Concord: Catellus walking away from Naval Weapons Station Project?

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Munitions bunkers are shown at the Concord Naval Weapons Station with the city of Concord in the background in Concord, Calif., Tuesday, May 10, 2005. The prospect of a base closing usually sends shudders through a community. But in the Northern California suburb of Concord, there’s a flutter of excitement over the possible closure of the local Naval Weapons Station. Closing the 63-year-old facility would have “tremendous benefits for the City of Concord and the Department of the Defense,” Mayor Laura Hoffmeister wrote in a letter to Navy officials. (AP Photo/Eric Risberg)

CONCORD — After months of turmoil over the integrity of the selection process for a Concord Naval Weapons Station developer, one of the two competitors is poised to walk away from the multimillion-dollar project.

During a special meeting Monday, the City Council will consider refunding Catellus Development Corp.’s $250,000 deposit, which Concord has used to cover its costs during negotiations. In exchange, Catellus would voluntarily withdraw from consideration, leaving Lennar Urban as the city’s remaining option to develop the first phase of the former military base. They would also waive and release the city from any claims.

The two parties reached this compromise after city staffers balked at the company’s request to change its term sheet and the negotiating agreement, which they say would have shifted up to $700,000 in financial risk from Catellus to Concord. Staff is recommending that the council reject Catellus’ request and refund the $250,000 deposit.

The meeting is at 6:30 p.m. at City Hall, 1950 Parkside Drive.

“We believe the economics and structure of our proposal are significantly better for the city than those of Lennar’s,” Catellus President Ted Antenucci wrote in a Tuesday letter to City Manager Valerie Barone.

“Catellus would prefer to continue moving forward in this process, yet every week, there seem to be new mistruths, fabricated by certain individuals, which makes it difficult for us to have confidence that the city wants a successful, long-term partnership with Catellus,” Antenucci wrote.

Lennar was taken by surprise by the announcement Friday.

“This is news to us, and we’re trying to understand what it all means,” spokesman David Satterfield said. “We will be at Monday’s meeting.”

This is the latest twist in a process that veered off course in September when Catellus demanded that the city investigate whether Lennar improperly lobbied council members and whether the lobbying led the city to pull the staff recommendation to award the lucrative development contract to the company.

In a report released last month, an independent investigator concluded that Lennar had lobbied then-Mayor Tim Grayson by orchestrating contributions to his state Assembly campaign.

The investigation also found that Mayor Laura Hoffmeister, Councilman Edi Birsan and Grayson had pushed to remove the recommendation for Catellus from the Sept. 29 staff report. Furthermore, Barone’s one-on-one discussions with council members about the recommendation violated the Brown Act’s prohibition against serial meetings, the investigation determined.

“It’s just a lack of trust, and we get it,” said Guy Bjerke, Concord’s director of community reuse planning. “They, for several reasons I believe, now don’t feel comfortable taking the kind of risk that is normally taken by a developer on this type of project.”

In 2005, the Base Realignment and Closure Commission approved closing the 5,046-acre inland area of the former naval weapons station. The city then spent years developing the Concord Reuse Project Area Plan, which calls for building up to 12,272 housing units and 6.1 million square feet of commercial space on about 2,300 acres of the former military base.

But the process city leaders long had touted as open and transparent began to unravel after the council narrowed the potential developers down to Catellus and Lennar in April.

In addition to the donations to Grayson’s Assembly campaign and the scrubbed staff recommendation, Catellus was concerned about rumors in the community that it had struck a side deal with the Seeno homebuilding company and had given city staffers Golden State Warriors playoff tickets. Antenucci strongly denied those allegations, and the city found no truth to the rumors.

Although Antenucci felt the investigation had validated some concerns, he was dismayed by recent comments from a couple of council members about Catellus. Hoffmeister’s claim that the company waited until the last minute to raise concerns about the selection process particularly rankled Antenucci since he had informed the city, to no avail, several months before writing the September letter that eventually led to the investigation.

In a March 17 letter, Antenucci requested that if the council selected Catellus as the master developer, Concord would reimburse the company’s additional $350,000 deposit in the event the city did not approve a final contract with Catellus or reach an agreement with the Navy, which must transfer the property to Concord.

Catellus also wanted to begin accruing fees 60 days after its selection as master developer, which the city would pay in full if the contract were never finalized.

“We were uncomfortable moving forward and continuing to take on all the risk,” Antenucci said Friday.

Regardless of the decision Monday, the city will proceed with the April 5 meeting to discuss the developers’ financial proposals for the base reuse project — even if Lennar is the only firm still in the running, Bjerke said. The council could choose Lennar, request more information or decide to restart the process of finding a developer.

“Obviously, the city never wanted to get to this point,” Bjerke said. “We worked very hard over the last six months to keep both players in the process, at the table, to give the council and the community a choice.”

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